Africa PE, PP prices likely to rise in June – producers

14 May 2013 13:06[Source: ICIS news]

LONDON (ICIS)--Producers’ offer prices for African polyethylene and polypropylene are likely to rise in June as a result of improved demand and low inventory levels throughout the chain, producers said on Tuesday.

“Prices will be increased in June by $30-40/tonne,” a PP producer said. “Demand is really picking up, customers have low stock, most would like to buy now.”

Many buyers refrained from purchasing during the last few weeks on the expectation of May PE and PP prices falling from April levels, as demand remained lacklustre, and prices tracked softer values in Asia.

Several producers’ May offer prices fell by up to $60/tonne (€46/tonne) from April levels.

While some traders felt prices would fall further still, it now appears that the market has reached the bottom of the price cycle.

As a result, buyers are now keen to restock before prices recover.

Furthermore, the early summer months of May and June traditionally see requirements for PE and PP start to improve.

However, the spot market for PE and PP appears to have dried up.

Many producers have either sold out of May volumes, or prefer to limit buying this month in anticipation of higher prices in June.

“We’ve already sold out, we sold out of CP [block copolymer] last week,” the producer continued. "The expectation is that prices will continue to rise, maybe another $20-30/tonne in July.”

A second PP producer said: “We’re receiving enquiries, we’ve sold out ... I’m not selling, and it’s the same behaviour from others [producers]. People are pushing to buy now, but we can get better prices next month. The Middle East [producers] will hold material [to sell at higher prices in June].”

The source added that prices could climb by $45-60/tonne over the summer.

However, a third PE/PP producer stressed that, while prices could indeed climb by $30-40/tonne in June, this would merely be a return to stability rather than a real upturn.

“This is more of recovery, prices fell below a level they should have been at. It’s a recovery to stability rather than an increase. Demand is normal for this time of year, May and June is normally quite good.”